Keep running. This bull market is for bravehearts.

By Barbara Kollmeyer

Reuters

Garcigrande fighting bull

It’s San Fermin week here in Spain. That means the brave and foolhardy, many after partying all night, have been hightailing it down the streets of Pamplona every morning. Slip or trip in that two-and-a-half-minute run and you could end up gored by a 1,300-pound bull. That was the fate of two runners on Thursday, one of the most dangerous days in this year’s classic run.

Madness, you say? Some would say investors are doing much the same these days, running alongside a market bull, and risking a potential goring down the road. Some say Thursday’s European-bank-crisis flashback, sponsored by Portugal, was a glimpse into what kind of tumult could await investors as QE dwindles away.

Talk of a bear-market around the corner is nonstop. Cautious talk was heard from billionaire investor Carl Icahn who said Thursday that “it’s time to be cautious” about Wall Street, while a conversation with Marc Faber this week found that Dr Doom still sees a 30% drop coming … at some point. But then there are pundits like James Paulson, who says worrying too much about getting stabbed by a heavy bull could mean missing out big gains.

“Should investors really be worried about whether the S&P 500 index will soon suffer a 10% correction (e.g. from 2,000 to about 1,800) if it eventually rises toward 3,000 sometime in the next few years?” asks the chief strategist at Wells Capital. Sure, a pause is coming, but that’s a blip on his radar screen, which calls for this bull run to last several more years.

Read more in our Call of the Day about Paulson’s thoughts on a second-half correction and what investors should do about it. And two bull markets? That’s the theory behind this great read from Capitalist Exploits.

Meanwhile, time to feast your eyes on banks, with Wells Fargo getting the earnings show on the road. Citi, J.P. Morgan and Goldman are due next week. Overall, revenues are headed south for banks, but as WSJ’s MoneyBeat points out, there are a few reasons to believe the slump may be temporary.

The economy: No data, but plenty of Fed-speak from the Rocky Mountain Economic Summit in Jackson Hole, Wy0ming. Philadelphia Fed’s Charles Plosser, Chicago Fed’s Charles Evans and Atlanta Fed’s Dennis Lockhart are all on the sked. Meanwhile, the latest survey of 50 economists find most don’t expect a recession.

Twitter
/quotes/zigman/23556538/delayed/quotes/nls/twtrTWTR has not escaped a shakedown for momentum stocks this week, down over 8%. Enter Goldman Sachs, which says it’s sticking to a buy rating on the Internet heavyweight and a $52 price target. That’s based on Twitter’s tweaks in product innovation and engineering, which analysts say are yielding fruit.

The call of the day: “Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight.” Sure, Ben Franklin, but that kind of thinking could put an end to the financial industry as we know it. Still, who says worry-warts always make good investors? In a note to clients, Wells Capital’s James Paulson has rattled off a list of reasons — largely economic — why a much-more turbulent second half of the year is ahead. How to brace for that? Hand-wringing isn’t involved in his four-step plan:

Ignore short-term volatility, which is hard to predict anyway, and keep portfolios positioned for a longer-term trend of rising stock prices and higher bond yields.

Don’t cut portfolio overweights towards equities, or you risk missing out on long-term potential for stocks. Ride through a 10% correction to get to the next 50% run.

There’s no compelling alternative to stocks. If stocks suffer a correction in the next few months, rising yields may be the result, so long-term bonds are not a great option, nor is cash.

Increase international diversification. For example, Australian and Canadian stocks relative to the S&P 500 are cheap as chips.

Random reads: Steven Spielberg taken to task for felling a triceratops.

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